March 28, 2005

Google AdSense withholds 28% of February earnings for tax purposes

Depending on how AdSense publishers filled out their tax information, they might discover 28% of their earnings missing when they receive their check this week. This is because the new payment system upgrades also included the ability to withhold federal taxes.

The email from Google support regarding this issue:

According to the tax information submitted in your Google AdSense account on Form W-9, your earnings are subject to tax withholding. As a result, we are required by the IRS to withhold 28% of your Google AdSense income. Although we were unable to automatically withhold federal taxes from your Google AdSense payments in the past, this functionality was added as part of recent enhancements to our payment system.

If you are one of the publishers affected, you can log in to your AdSense account look in your payment history. If you indicated you were subject to tax withholding when you last submitted your tax information to Google, there will be a line in your payment history stating "Tax Withholding" with the dollar figure being withheld.

This caught many publishers by surprise, and many receiving checks are suddenly finding themselves with checks issued for 28% less than they were expecting.